The Impact of the Biomass Crop Assistance Program on the United States Forest Products Market: An Application of the Global Forest Products Model

Abstract

As the largest consumer of petroleum and second highest producer of greenhouse gas emissions, the United States currently is a leading country in bioenergy production driven by a series of policies. One such public program that directly subsidizes biomass feedstock growers is the Biomass Crop Assistance Program (BCAP), which recently received attention for stimulating the development of bioenergy. However, critiques were also raised, concerning the possibility of intensifying the feedstock competition between bioenergy and forest products. This study, therefore, aimed at assessing the effects of BCAP on the forest product markets with the Global Forest Products Model (GFPM). Three alternative scenarios were designed to simulate three payments in BCAP. In the first scenario, the matching payment was simulated by adjusting the manufacturing cost of fuelwood and particleboard. In the second scenario, establishment payment was simulated by adjusting the supply rate of industrial roundwood. In the third scenario, the annual payment was simulated by linking the supply change rate with the soil rental rate for industrial roundwood. We found that, under the matching payment scenario, industrial roundwood and particleboard will experience a sharp decrease in production and an increase in price. For establishment payments, industrial roundwood will experience a continuous increase in production and a decrease in price. For annual payments, the industrial roundwood will experience a V-shape pattern production.